Warner Brothers Discovery
While far from certain, a merger between Warner Brothers Discovery and Paramount Global could spark further consolidation in the media and entertainment industry. AFP

Warner Brothers Discovery shares slid more than 5 percent Wednesday after reports emerged that the media and entertainment giant is exploring a merger with rival Paramount Global.

Warner Brothers Discovery chief executive David Zaslav met with Paramount Global boss Bob Bakish for several hours to discuss the possibility of merging the companies, Axios reported, citing unnamed sources.

The talks -- which took place on Tuesday in New York -- were described as preliminary, with the outcome uncertain.

Zaslav has also spoken with Shari Redstone, who owns Paramount's parent company, about the potential for a deal, Axios reported.

Warner Brothers Discovery brands include CNN, HBO, and its eponymous film studios, while Paramount's properties include its movie studios of the same name and the CBS broadcasting group.

Zaslav and Bakish discussed ways the companies could build on one another's strengths, such as by combining their streaming services to better compete with Netflix and Disney+, the report said.

Warner Brothers Discovery had a market value of about $28.4 billion based on its closing share price Wednesday -- more than double the roughly $10.3 billion valuation of Paramount Global based on its closing share price.

Warner has hired bankers to explore an acquisition, Axios reported.

A merger of that size could spark further consolidation in the media industry and draw intense scrutiny by US regulators.